Digital and Social M&A Activity Seems Backwards

Salesforce.com’s announcement of their intent to buy ExactTarget (which also includes Pardot) was right in line in with other acquisitions in the marketing automation space. First, a social media analytics platform is developed or purchased, then a social media publishing and marketing company acquired, and finally a full digital marketing automation suite rounds out the portfolio.

But wait! Doesn’t that seem backwards? Wouldn’t it make more sense for a company with a digital marketing automation platform to try and buy up the new technology, in this case social media? It’s not unreasonable to think that even a big software company would first focus on what are still the most common forms of electronic marketing – websites, search engines, blogs, and email – and then the newer marketing channels such as social media and social networks. The dynamics and usefulness of digital marketing is better understood and is something that pretty much every company already does. Social media and social network marketing, in contrast, are still emerging as marketing channels. So, why pick up the social media marketing companies first?

The easy answer is that social media is newer and sexier. I don’t believe that’s the driver behind these deals since that’s not how companies make acquisition decisions. More likely, bigger software companies saw social media as a greenfield opportunity. Customers didn’t have social media marketing platforms yet so they were primed to buy them. Lots of companies already had digital marketing automation in place. Why go where the competition is already when you have an open market to run around in when you can focus on an open field? It’s also what customers are asking for and who can argue with that.

Why the sudden interest in digital media marketing automation companies? Customers want complete and integrated solutions. Oracle customers don’t want to buy the Oracle SRM suite for customer engagement and then have to buy something else for the rest of their digital marketing needs. Subsequently, Oracle buys Eloqua. The same is true for Salesforce.com’s Marketing Cloud. It was really a social media marketing cloud and needed to expand just to keep up with companies such as Adobe and Shoutlet.

For customers, the ability to have coordinated, multifaceted, and continuous digital marketing creates new opportunities. The digital and social marketing suites enable them to take advantages of the potential of new marketing.

The next wave will be mobile marketing platforms. Marketing through mobile devices is still disconnected from the overall marketing automation landscape. The potential for analytics based on mobile computing is also still in its infancy. Once the big software companies digest the recent acquisitions in the social and digital marketing space, I expect to see them gorge themselves on mobile marketing startups.